Facts

Laurence Rivkin, the trustee of the LNR Family Trust dated Aug. 2, 1987, and the Laurence Rivkin IRA Rollover initiated an arbitration action against Charles Schwab & Co. Inc, The Charles Schwab Corp., and Charles Schwab Investment Management Inc. for securities fraud, breach of fiduciary duty, constructive fraud, fraud and deceit, California securities fraud, unfair sales practices, negligence, negligent misrepresentation, and breach of contract. The claimants' allegations stemmed from transactions with the respondents in the Schwab YieldPlus Fund.

RESPONDENT'S CONTENTIONS:
The respondent contended that unprecedented market conditions and the credit crisis of 2007-2008 caused a run on the YieldPlus Fund and a drop in its share price. Schwab had fully disclosed the material facts and risks of the YieldPlus Fund to investors. The plaintiff held the Fund over a number of months and failed to take action to sell his position despite knowing that it was falling in price.

Damages

With respect to the trust, the claimants sought over $645,440 in compensatory damages, $2 million in punitive and exemplary damages, $13,000 for expert fees, and $5,003 for other costs. With respect to the IRA Rollover, the claimant requested $20,499 in compensatory damages.

Result

The arbitration panel found the respondents jointly and severally liable and awarded the IRA Rollover $5,978. In addition, the panel awarded Rivkin $321,267 against the respondents.

Other Information

ARBITRATORS: Michael D. Briggs, Judith A. Gust, Steven A. Fox.